Spring Real-Estate Guide: Let’s Make a Deal

How the escalation clause factored into a recent bidding war.

Last spring, the Washington area saw a resurgence in the escalation clause, a tool that lets a buyer increase his or her bid in rising increments—up to a certain maximum—if a higher bid comes in.

The seller placed a townhouse in the Diamond Farm neighborhood of Darnestown on the market for $225,000.

“It was in the spring of last year during that perfect storm of low inventory and high demand that we started to see the escalation clause appear again,” says Greg Ford, president of the Greater Capital Area Association of Realtors. “They’re strategic, but they come with risks.”

Here’s how the escalation clause factored into a recent bidding war over one of Ford’s properties.

Click on the image to view a larger version.

Illustrations by Chris Philpot.

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